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Santa Inc. operates pop-up stores across North America during the holiday season. The company specializes in selling hand-crafted holiday ornaments that are directly imported from
Santa Inc. operates pop-up stores across North America during the holiday season. The company specializes in selling hand-crafted holiday ornaments that are directly imported from an overseas manufacturer, Elf GmbH. Santa Inc. is currently making its inventory decisions for the upcoming 2024 winter holiday season based on the newsvendor model (no need to hustle too hard to make money during the holiday season). One of the item under consideration is a miniature Christmas house. Each house will be sold at the retail price of $30. The wholesale price of the miniature Christmas house (the price at which Santa Inc. will buy the item from Elf GmbH) is $8 per unit. It costs Elf GmbH $2 per unit to manufacture the miniature Christmas house. Leftover inventory at the end of the selling season will be disposed and Santa Inc. receives no value. Demand for the miniature Christmas house is currently forecasted to be normally distributed with mean of 20,000 units and standard deviation of 5,000 units
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